Dollar touches highest level since June on Greek woes

British pound, Swiss franc make big moves

By

DeborahLevine

WilliamL. Watts

NEW YORK (MarketWatch) -- The U.S. dollar gained on its major rivals Friday, pushing it to the highest level since June and extending the week's strong gains against the euro, after Greek officials said they may soon be unable to sell debt, according to published reports.

"The increased uncertainty about financial aid for Greece is likely to keep the euro under pressure," strategists at Barclays Capital said.

The euro
EURUSD, +0.7313%
fell to $1.3535, down from $1.3620 in North American trade late Thursday. The shared currency rose toward $1.38 earlier in the week, but has declined about 1.2% since last Friday.

The dollar index
DXY, -0.46%,
which measures the U.S. unit against a trade-weighted basket of six major currencies, rose to 80.747, up from 80.228 Thursday. It touched 80.889, the highest level on a closing basis since June 2009.

It's gained 0.9% this week.

The dollar rose against its Japanese counterpart to buy 90.48 yen, up from 90.30 yen Thursday.

Greece is just a step away from being unable to borrow, Greek Prime Minister George Papandreou told union members Friday, according to Reuters.

News reports said German officials have indicated support for a joint bailout of Greece by European governments and the International Monetary Fund if Athens needs aid.

Papandreou on Thursday pressed for a guarantee of financial support at a European Union summit set to take place next week.

Backed by Germany and other countries, an IMF bailout has spotlighted a rift within the euro zone. France and the European Central Bank have in the past rejected talk of IMF involvement. Critics say bringing in the IMF would be a black mark against European economic and monetary union.

"Greece is trying to force the E.U. into a firm commitment within a week with a threat of going to the IMF for a bailout," said T.J. Marta, chief market strategist at Marta on the Markets. "Germany is basically saying, 'Fine, go to the IMF,' while others in the E.U. want to use the crisis to establish greater intra-E.U. cooperation and control."

Swissie up, pound down

The Swiss franc, meanwhile, reached a 16-month higher vs. the euro
CUR_EURCHF,
a day after a Swiss National Bank policy-maker was quoted as saying Switzerland should prepare for higher interest rates and a Swiss franc that responds fully to market pressures. Read about the Swissie's rise.

The British pound
CUR_GBPEUR
declined vs. the dollar, which strategists tied to weakness in part from remarks by Andrew Sentance, a member of the Bank of England's Monetary Policy Committee. He told CNBC that a double-dip recession couldn't be ruled out, although a gradual economic recovery is more likely.

The pound fell 1.5% to $1.5011.

More from China

Meanwhile, a Chinese official fired another salvo in the ongoing currency dispute between the United States and China, in which U.S. politicians have said they believe the Chinese currency is undervalued.

He Ning, head of the Department of American and Oceanian Affairs at China's Ministry of Commerce, said Friday that China's purchases of the U.S. government debt have helped stabilize U.S. capital markets, and trade between the two nations also has created U.S. service jobs, according to Dow Jones Newswires.

Ning was "basically warning the U.S. to back off as speculation mounts that it could be named as a currency manipulator by the U.S. Treasury," analysts at Action Economics said.

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